Who's Afraid Of The Big Bad Tepper?

Most market participants know that "you don't fight the Fed" or ECB or BoJ etc... (unless they tell you markets are complacent or frothy or "to sell"). But what really scares market participants... based on today's horrifying short squeeze... is the word of the follicularly-challenged master of the universe...

"Most shorted stocks" closed generally in line with the board market... (but were a lot weaker as stocks dipped early before Tepper's comments ripped them higher)...

"Don't fight the Fed" and "Don't short the "trash" when Tepper says 'buy"...

I stopped ALL investment into my 401-k in 2008, then attempted to take out loans against what I had. All 401-k loans are blocked. So I hover over my itty-bitty 401-k stash and watch in amazement as it grows by 125% from 2008 until now.

I don't trust this. It reminds me of my buying a house in 1998 for 75k and being offered home equity loans of $360k eight years later. It feels as slimy now as it did back in 2007. It isn't right, it doesn't feel right, somethings fucking wrong in the situatiion...and I'm too dumb to figure it out.

My debt adversion prevented me from taking any of the ridiculous loan offers. My weird gain adversion has kicked in to where I expect every dollar 'earned' is going to get kicked in the nuts and collapse as any of us would...I'm not putting another fucking dollar into the system that is about fuck me. My little $53k in locked-in 401-k is considered a sacraficial lamb in my investment world. I still watch the fuck out of it, and twiddle with it...but I don't expect to ever see a penny of it in my lifetime (like social security). That money was sent in while I was asleep...there won't be anymore while I'm awake until things drastically change.

Interesting..."The United States are nearer to the final triumph over poverty than ever before in the history of any land." Herbert Hoover 1928...and we know what happend next...the Great Depression started and stocks lost almost 80% of their value....to be continued...

The reversal in the dollar and Euro is kinda textbook. I was late to figuring it out, so I started a small long position in the Euro at 1.36. There needs to be follow through tomorrow and next week, but if it can close above 1.38 I'll be buying every pullback. I don't pretend to understand why the market thinks the Euro is stronger than the dollar, but this market seems ripe for a long move. Just playing the reversal and hoping it continues.

Weak dollar should be positive for gold in the short to medium term. There needs to be follow through tomorrow, no matter what the number is, on the order of $20-$30 up. All the longs caught above $1280 who would have been looking to get out, might now give it more time due to the dollar reversal. Gold has a lot of work cut out for it, but there is hope now. If silver closes in the mid-$19s it will be the first close above that downtrend from $49 in 3 years, except one fake-out. So tomorrow is very significant. A down day would be demoralizing. I'm flat now and considering playing the NFP long.

I'll be staying small for awhile in gold and the Euro b/c there's so many conflicting forces. My main focus is going to be the NQ. I've been short term trading for quite awhile now b/c I thought the market was topping and then I was in denial and then it ran away from me. My biggest regret of the year was not playing the right shoulder failure breakout in the NQ. It was a perfect ascending wedge too. Clearly, an area the shorts had to defend and when they didn't the covering frenzy began. Here's the question though: how is this market going to stop anytime soon?

If there was any intention or ability or impetus to stop this market, the perfect head-and-shoulder pattern that formed this year would have held. It didn't and many of those shorts got burned. They are not likely to try again anytime soon. In fact, like me, many of them are probably now looking to go long on a pullback. Barring a massive change in current global central bank policy, like the BoJ slowing down, we might be entering the final mania phase of a bull market where all the early sellers regret it and start piling back in, all the shorters throw in the towel, and all the permabulls lose their minds with greed.

Seriously, what is going to stop this market? There's no debt ceiling/fiscal cliff issues on the horizon. Central banks are as easy as ever with no end currently in sight (in terms of actual rate hikes for the Fed). No banks or countries are currently under threat of default (except in China, but how exposed is the West to that - does the market even care?). Prices are already so extreme, does that even register anymore? I think the only way this market ends (barring a black swan event) is when the COT positioning gets so extreme there just isn't anyone left to buy. And we aren't even close. Just two weeks ago the net short position in the ES peaked at -133,000 futures contracts. Last week that was cut in half. This week it's likely to be barely net long. The extreme last spring I believe was over 300k net long for the Large Specs.

So is the jobs number tomorrow even going to matter? Even if the numer is 2 jobs created, any selloff won't last long. Under normal circumstances, I would say after being straight up for almost 3 weeks, if there's a pop and rally in the morning, there's potentail for the sell-into-strength reversal. I'm definitely going to be watching for it, but not holding my breath. My plan is to stay small and be short term until there is a pullback no matter what level it comes from. I just need to see selling. If we keep going higher, the recent high at 3742 will likely be bought up when the backtest comes. I think the only chance of going lower than 3742 is if it happens very soon, like tomorrow. Otherwise, that's where I will look to start a position for what appears to be the next leg up. One would think the 1900 area in the ES would be backtested at some point too. I suppose that means the NQ has to start outperforming for those events to happen simultaneously. Is it a sign of nearing the end when I now think there isn't a number you can throw at me that is impossible for these markets to reach? That can't be good.

One more thing. The breakout seems far enough along that we've probably re-entered the mode that as long as you buy a pullback at least 20 ES points (or the NQ equivalent) from the top, even if your timing is horribly wrong and it keeps moving against you, you will get a chance to get out. Meaning, once big positions start getting built back up in the Large Specs, they don't generally allow an inverted V reversal off the top because it's not profitable for them. Could it happen? Of course. But as long as your size isn't crazy, the vast majority of times there is always a backtest of the high, so you just have to handle the heat and wait it out. Remember last May when Bernanke first mentioned taper? The Large Spec positions were huge and that was basically a black swan event. The ES sold off 53 points then rallied back to within 12. That's what I mean. As long as you're not top ticking the market, odds are you'll get a chance to scratch it, or come close. I'm gonna put that philosophy to the test and see what happens.